Thursday, December 10, 2015

Hypocrisy: Consumer Financial Protection Bureau

I thought yesterday's WSJ article on the Consumer Financial Protection Bureau (CFPB) was interesting simply because of the fact that they were using a home-brewed, non-scientific approach to try and determine a person's race based on their names.

I'm not sure what qualifies as "racist" these days, but I think assuming a person's race based on their name may be cutting it close...
(Also reminds me of the study that showed people pre-judge others simply based on their name).

The Republican staff of the House Financial Services Committee has released a trove of documents showing that bureau officials knew their information was flawed and even deliberated on ways to prevent people outside the bureau from learning how flawed it was. 
The bureau has been guessing the race and ethnicity of car-loan borrowers based on their last names and addresses—and then suing banks whenever it looks like the people the government guesses are white seem to be getting a better deal than the people it guesses are minorities. This largely fact-free prosecutorial method is the reason a bipartisan House supermajority recently voted to roll back the bureau’s auto-loan rules
The vote occurred before the release of the House committee report, which shows that the regulators were guessing and knew that they weren’t even making good guesses. A May 2013 draft of a memo for bureau Director Richard Cordray prepared by bureau staff including Assistant Director Patrice Ficklin reported they had “reason to believe that our proxy is less accurate in identifying the race/ethnicity of particular individuals than some proprietary proxy methods that use nonpublic data.”
A draft version of the memo also noted that if the bureau never publicly released the details of how it was guessing the race of borrowers, “our internal methodological deliberations will not be discoverable.” In other words, the law-abiding taxpayers getting sued by the bureau would not be able to learn how bogus its discrimination claims were. A draft memo also noted that a “methods announcement” would “endanger” the work of the bureau in part “by providing fodder to defendants to show how our methods are inferior to other proprietary proxies.”
Unable to sustain its non-transparency policy, the bureau eventually released some information on its guessing methodology, and outsiders have been poking holes in it ever since. The Wall Street Journal recently recreated the algorithm used by the bureau to do its guesswork and tested it with some well-known politicos. The algorithm didn’t know what to make of such last names as “Kasich” and “ Obama.” (WSJ)
This is a perfect example of overzealous bureaucracy-in-action.

The CFPB was created by Obama and championed by Elizabeth Warren (D-MA) to protect consumers against large corporations (specifically banks and financial institutions) taking advantage of them.

However, much like the prosecution of Aaron Swartz, it shows the 'win at all costs' mentality government agencies take when they become politicized tools and are used to target specific people/industries, rather than letting facts dictate what to pursue and is in the best interested of the people they serve.

Despite their crusade against auto loan lenders and charge them for (purported) racist practices, the CFPB has a documented, factual history of racism within its own ranks.
Reports from last year showed rampant discrimination in job reviews and poor working environments for minorities, particularly blacks, with some likening it to a "plantation".

According to confidential internal stats obtained by the American Banker, "CFPB managers show a pattern of ranking white employees distinctly better than minorities in performance reviews used to grant raises and issue bonuses." 
In fact, the agency's own 2013 data show that whites were twice as likely as African-Americans to receive the CFPB's highest job performance grade of "5." Over 20% of white staffers got top ratings — and were held up as "role models" — compared with just 10.5% of blacks. (IBD)
A former employee of the Consumer Financial Protection Bureau (CFPB) on Wednesday compared the workplace atmosphere to a “plantation,” because of how black employees such as himself were treated. 
In the third House Financial Services subcommittee hearing to address claims of discrimination against the CFPB, Kevin Williams, a former quality assurance monitor at the agency, painted a picture where black employees were constantly belittled – even to the point where they were stereotypically offered fried chicken at company lunches. (The Hill)
Hopefully things have changed since those reports come out last year; but considering the unbelievable institutional corruption within another federal department and the inherent nature of bureaucracy to prevent change, I won't hold my breath.

No comments:

Post a Comment